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Chip heavyweights hope alliance adds up

Motorola, Philips and STMicroelectronics will collaborate on manufacturing technologies that ultimately could produce new kinds of chips for consumer electronics.

Motorola, Philips and STMicroelectronics announced plans Friday to collaborate on manufacturing technologies that ultimately could produce new kinds of chips for consumer electronics.

The chipmakers will work together during the next five years with chip manufacturer Taiwan Semiconductor Manufacturing (TSMC) to research advanced manufacturing processes and materials that result in smaller, faster, more power-efficient processors, they said.

The companies' main focus will be on creating new manufacturing techniques that allow them to produce more advanced "system-on-a-chip" processors--chips that contain all of the necessary elements to run a device--using 90-nanometer and smaller manufacturing processes and 300-millimeter wafers.

Moving to smaller circuit sizes in a timely manner will allow the partners to meet demand for smaller, more integrated systems on chip processors. These chips, which are present in a wide range of devices from set-top boxes and MP3 players to networking equipment are becoming more popular for use in consumer-electronics, communications and networking devices because of their ability to run an entire device. They also help cut down on costs.

The new pact will also help its members, especially Motorola, match deep-pocketed competitors in terms of technology development and research and development budgets. Developing new manufacturing processes and installing them in new fabrication plants can cost billions of dollars.

Competition from Big Blue
The alliance's main competitor is likely to be IBM, which recently expanded an existing chip pact with Sony and Toshiba. The companies are developing new manufacturing processes for so-called system-on-a-chip products. They have already collaborated to create a new processor architecture, called Cell. Some analysts speculate Cell chips will end up in Sony's PlayStation 3 game console.

Meanwhile, several other companies, including Intel, Advanced Micro Devices and National Semiconductor, have expressed a keen interest in making chips for the consumer-electronics, embedded-processor and networking markets.

AMD, for example, recently launched a new Personal Connectivity Solutions group, which will focus on chips for home-networking equipment, Web "tablet" devices and eventually handhelds. Intel is doing the same with its new XScale processor.

To get the work done, Motorola will join Philips and STMicroelectronics in a newly established research and development center in Crolles, France. The company will also pitch in on a pilot 300-millimeter chip production line there.

At the Crolles facility, the companies will develop new chip manufacturing technology from the 90-nanometer level down to 32 nanometers during the next five years. A nanometer, equal to 1 millionth of a meter, is used to measure the distance between transistors. Most current chips are built at 180- or 130-nanometer levels. As manufacturers shrink this size, about every two years, the chips become cheaper to produce, consume less power and can achieve higher clock speeds.

Materials are also key
Smaller size won't be the only task the companies collaborate on, however. Chipmaking materials have become equally important to increasing performance and reducing power consumption. As a result, Motorola will contribute its research into materials such as Silicon on Insulator, or SOI, which works to make a chip reach higher clock speeds or use less power to maintain a specific clock speed. Meanwhile, Philips and STMicroelectronics will provide research into new chipmaking processes for memory and analog circuits.

"This investment will ensure that Motorola and its partners are in leadership positions to supply the highest-value products to our customers," Fred Shlapak, president of Motorola's Semiconductor Products Sector, said in a statement. "The beauty of this alliance is that it will dramatically accelerate the development of future technologies, ensure proliferation of those technologies throughout the industry and at the same time result in lower costs for each member of the joint-development project.

Nearly as important as sharing technology, Motorola, Philips and STMicroelectronics will also split the bill. The companies will share capital expenditure and research and development costs as well as production capacity for the Crolles 300-millimeter pilot line. Jointly, the three companies will pitch in about $1.4 billion by 2005, they said.

TSMC, meanwhile, will gain access to the manufacturing technologies created by the new joint pact, allowing it to produce large numbers of the new chips for customers at its fabrication plants.